After gaining nearly 38% from the November 2016 election to Trump’s State of the Union speech, the amazing stock market boom finally suffered it first test.

Just as soon as the S&P 500 logged a new entry in the record books of going 18 months without a 5% correction, another record quickly followed with the fastest decline from an all-time high in 90 years.

Now, the market’s down for the year, having given back all of its gains so far in 2018. This time on Financial Sense we spoke with Craig Johnson from Piper Jaffray about what the recent decline means for the markets and investors.

Market Likely to Drop then Pop Into Year End

Last month in January, as the market was going up in a parabolic fashion, Johnson called for the S&P 500 to drop to 2400 and for the Dow Jones Industrial Average to fall to 22,000. After this correction, possibly by the spring or summer of 2018, he sees equities heading higher, with the S&P projected to hit 2850 by the end of the year.

“We feel good about our 2850 objective for the S&P for the year, but we don’t believe it’s going to be made in a linear manner,” he said.

The reason is, he’s concerned about rising interest rates, and we’re seeing bond yields across the board rise to new multi-year highs.

The long end of the curve hasn’t gone up much yet, but we may see a sharp adjustment higher in rates, Johnson noted. This will likely leave us closer to a 3 percent 10-year bond yield sooner than many probably realize.

We’ve also got a weaker dollar internationally, which hurts international investors in US debt, who are seeing both currency valuation and principal losses on the fixed income side.

Is a Bear Emerging, or Something Else?

The secular bull market will last until we get to a 5 or 6 percent 10-year bond yield, Johnson believes. That said, we have had corrections and bear markets in the context of secular bull markets in the past.